Interesting that they are announcing the product will be in short supply, and blaming the Chinese new year (like it came out of the blue).

I'll still hold on to my skepticism, that this is a very complex model to scale and that no one in their right mind should be "Giving" away cloud services when it's a known monthly cost.

I wouldn't be surprised if the phone does well and then every backer or new buyer is forced to buy it with a monthly subscription on top of their carrier costs - you simply can't give data away for free in 2016.

I'll still hold on to my skepticism, that this is a very complex model to scale and that no one in their right mind should be "Giving" away cloud services when it's a known monthly cost.

Well, but what's the problem with known monthly cost? They are not giving away data for free. You pay $399 for the phone. Of course the cloud storage they probably just buy from some "supplier" is included in that price. The cloud storage is tied to the phone I guess. You also can assume that in 2-3 years 95% of your customers won't use the phone anymore. Now you can actually calculate very well how much it will cost you.And it is not like that's the only "known monthly cost" when you sell a phone. Think of the people you have to pay that take care of software updates. Or storing all the spare parts for repairs... etc.. All monthly costs that are just factored into the retail price beforehand. Nothing new in the world of selling products. And cloud storage will probably just get cheaper and cheaper anyway.

That's also how "life long warranties" work. You just assume that almost no one will actually take advantage of that promise. But the handful of people that do - you can probably take care of them.

1. I just bought a Microsoft phone online. I think it's a good model, it just requires a little marketing to let people know they can do it.

2. Does anyone pay for cloud storage? I just got 20-30 gb taken away by Dropbox. I have no plans to pay for it. Especially at $10+ a month. Someone has to do this for $.99 / mo. (come on Apple!). That would be reasonable.

I'll still hold on to my skepticism, that this is a very complex model to scale and that no one in their right mind should be "Giving" away cloud services when it's a known monthly cost.

Well, but what's the problem with known monthly cost? They are not giving away data for free. You pay $399 for the phone. Of course the cloud storage they probably just buy from some "supplier" is included in that price. The cloud storage is tied to the phone I guess. You also can assume that in 2-3 years 95% of your customers won't use the phone anymore. Now you can actually calculate very well how much it will cost you.And it is not like that's the only "known monthly cost" when you sell a phone. Think of the people you have to pay that take care of software updates. Or storing all the spare parts for repairs... etc.. All monthly costs that are just factored into the retail price beforehand. Nothing new in the world of selling products. And cloud storage will probably just get cheaper and cheaper anyway.

That's also how "life long warranties" work. You just assume that almost no one will actually take advantage of that promise. But the handful of people that do - you can probably take care of them.

If you take a look at the rapidly crumbling tech bubble, a consistent theme is people realizing that giving away these cloud services and the reality is the pricing structure is not properly designed. Box.com and Hulu are great examples. Apple gives away a much smaller amount (5gb) for free and does charge $.99 for their 50 gig plan, but they have a lot more leverage given their scale and island-loads of cash.

If you've worked with Cloud services you'll know you're not just paying for storage, you're paying for the usage of that storage. So even if I'm only storing 5gb, if I regularly recall that data then I may be transferring 25gb over the course of a month.

You can PLAN on baking that in - however you absolutely can not predict on a new product the utilization of that service. You can make an estimate (to your point, you can estimate how long a suitcase will take to break, cost of repair, and then calculate who will fix it vs buying a new one, then offer a "lifetime" warranty) but the issue with that is this is a new field, and a fundamentally new model they are proposing.

Assuming ~$2 of incremental cost per month suddenly means you are burdening your device with ~$50 of expenses over 2 years. If you build all of your products and assume a $100 BOM, $50 worth of services, and you can sell it for $399 that's fine, but what happens if the product really takes off and people realize they no longer need to delete their 20 gigs worth of selfies? Now you might be using $5 per month worth of storage and now you've taken an extra $75 dollar hit on your margins - but you aren't making a cent on that income.

Anyone who looks at the warning signs of the tech stocks can see that private investors are starting to realize their gold rush into the tech startup world may have been based on a lot of hype and potential that never materialized, and I don't see a company who is launching a few thousand smart phones having the scale or business model to do anything other than hope they get absorbed by someone before people realize it's not a sound business strategy.

We can revisit this thread in 12 months when the stock market has tanked and we're all wondering what happened to the dot coms...again.

You talked me into an iPhone! hehe I only back up to the cloud, I rarely access the data.

I don't follow the market too much, but I was just reading about venture capital drying up too. Not surprising considering how over-valued everything was.

I think the secret though is in reality, your phone will backup to the cloud every night (assuming you leave backups turned on and keep wifi enabled) so the transparent use of cloud data is where things like this get lost in translation.

Now the phone is smart enough to know the difference and only backup whats new, but if you record a few videos a week that turns into gigabytes very quickly.

Given the nature of their approach and the small initial investment in the hardware I can't see them not wanting to get absorbed ASAP as a software play for a larger Android player.

You can PLAN on baking that in - however you absolutely can not predict on a new product the utilization of that service. You can make an estimate (to your point, you can estimate how long a suitcase will take to break, cost of repair, and then calculate who will fix it vs buying a new one, then offer a "lifetime" warranty) but the issue with that is this is a new field, and a fundamentally new model they are proposing.

Hm, I see your point. It is true, it COULD backfire horribly. So my guess is they are betting it won't and people don't need as much storage as they think they do. The 6000 units are to prove or disprove exactely that.

Interesting to see that they got absorbed by a hardware manufacturer though. I suspect their in house talent was probably more biased to the hardware side and Razer might be looking to get into the Niche mobile space. Possibly a Shield-like gaming device or a standalone VR headset.